Pricing Under Distress

S. Boragan Aruoba, Andrés Fernández Martin, Daniel Guzman Giron (dguzman@student.ubc.ca), Ernesto Pasten and Felipe Saffie

No 32538, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Uncertainty triggers two confounding effects: a realization and an anticipation effect. By using the 2019 riots in Chile as a quasi-natural experiment, we show that the pricing behavior of supermarkets is consistent with a pure anticipation effect: during the 31-day period following the start of the Riots, supermarkets reduce the frequency of price changes and, conditional on a price change, the absolute magnitude of price changes increase. A quantitative menu cost model with news about a future increase in idiosyncratic demand dispersion can deliver these pricing dynamics. The effectiveness of monetary policy crucially depends on the timing of the intervention.

JEL-codes: E31 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-cba and nep-mon
Note: ME
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w32538.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:32538

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32538
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).